SECURITIES AND EXCHANGE COMMISSION

                          WASHINGTON, D.C. 20549

                                  FORM 10-K

         [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
               SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]

                  For the Fiscal Year Ended December 31, 1996

                                     OR

           [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

        For the transition period from __________________ to ________________

                      Commission File No. 0-13556

                        Cluster Housing Properties
                  (A California Limited Partnership)

              (Exact name of registrant as specified in its charter)

                         California 04-2817478

                            (State  or  other   jurisdiction   of   (I.R.S.
                             Employer    incorporation    or   organization)
                              Identification No.)

          5110 Langdale Way, Colorado Springs CO 80906

          (Address of principal executive offices) (Zip Code)

                            (719) 527-0544
          (Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Units of Limited
Partnership Interests

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by  Sections  13 and 15(d) of the  Securities  Exchange  Act of 1934
during the preceding 12 months (or for such shorter  period that the  registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days. Yes _X_ No ___

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of  Registrant's  knowledge in definitive  proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]

Aggregate  market  value  of  voting  securities  held  by  non-affiliates:  Not
applicable, since securities are not actively traded on any exchange.

Documents incorporated by reference:  None

The Exhibit Index is located on page ______


<PAGE>


                                                      PART I

ITEM 1.   BUSINESS

This form 10-K contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934.  Actual  results could differ  materially  from those  projected in the
forward-looking  statements as a result of a number of factors,  including those
identified herein.

Cluster Housing Properties (the "Partnership"), formerly Berry and Boyle Cluster
Housing  Properties,  is a California  limited  partnership  formed on August 8,
1983.  The General  Partners are Stephen B. Boyle and GP L'Auberge  Communities,
L.P., a California limited partnership, formerly Berry and Boyle Management.

The primary business of the Partnership is to operate and ultimately  dispose of
a diversified portfolio of income-producing  residential real properties through
its joint venture interest in such  properties.  Descriptions of such properties
are included below in "Item 2.  Properties" as well as in note 5 of the Notes to
the Consolidated  Financial  Statements included in this report and incorporated
herein by reference thereto.

On October 25, 1985, the Partnership  acquired a majority joint venture interest
in the Sin Vacas Joint  Venture,  which owns and operates a 72-unit  multifamily
rental  property  located  in  Tucson,   Arizona.  The  Partnership  contributed
$2,520,954  to the Sin Vacas Joint  Venture which was used to repay a portion of
the construction loan on the property.  The balance of the construction loan was
repaid  through the proceeds of a $2,575,000  permanent  loan from a third party
lender.  In  accordance  with  the  terms  of  the  Partnership  Agreement,  the
Partnership  paid an  acquisition  fee of $250,000 to GP L'Auberge  Communities,
L.P.  for its services in  structuring  and  negotiating  the  acquisition.  The
Partnership also incurred acquisition expenses relating to the acquisition which
totaled $168,686.

On June 11, 1987, the Partnership  acquired a majority joint venture interest in
the Villa Antigua  Joint Venture which owns and operates an 88-unit  multifamily
rental property  located in Scottsdale,  Arizona.  The  Partnership  contributed
$2,494,677  to the Villa Antigua Joint Venture which was used to repay a portion
of the construction  loan on the property.  The balance of the construction loan
was repaid  through the  proceeds of a  $3,200,000  permanent  loan from a third
party lender.  In accordance  with the terms of the Partnership  Agreement,  the
Partnership  paid an  acquisition  fee of $350,000 to GP L'Auberge  Communities,
L.P.  for its services in  structuring  and  negotiating  the  acquisition.  The
Partnership also incurred acquisition expenses relating to the acquisition which
totaled $31,729.

On May 14, 1996, the Partnership and certain affiliates consummated an agreement
with Evans Withycombe Management,  Inc. and certain of its affiliates ("EWI"), a
Phoenix based residential development,  construction and management firm and the
developer  of the  Villas  at Sin  Vacas and  Villa  Antigua  properties,  which
separated  the  interests  of  EWI  and  the  Partnership,  thus  affording  the
Partnership  greater  flexibility  in  the  operation  and  disposition  of  the
properties.  In  consideration of a payment by the Partnership to EWI of $73,775
and delivery of certain mutual  releases,  EWI (i)  relinquished its contract to
manage  Sin Vacas and Villa  Antigua  and its option to  exercise  its rights of
first refusal with regard to the sale of those  properties and (ii) assigned all
of its  interest in the Sin Vacas  Joint  Venture  and the Villa  Antigua  Joint
Venture to the  Partnership  (while  preserving  the  economic  interests of the
venturer in these Joint Ventures),  which resulted in the dissolution of the Sin
Vacas Joint Venture and the Villa Antigua Joint Venture.  EWI may still share in
the cash flow  distributions  or proceeds from sale of the properties if certain
performance levels are met.

On July 16, 1986, the Partnership assigned its right to acquire a property known
as  L'Auberge  Pinecliff   ("Pinecliff"),   formerly  Autumn  Ridge,  a  96-unit
multifamily rental property located in Colorado Springs,  Colorado to a Colorado
joint venture (the Autumn Ridge Joint Venture) which acquired the property for a
purchase price of $7,320,760.  The Partnership simultaneously contributed to the
Autumn Ridge Joint Venture an amount equal to the total  purchase price less the
proceeds of a $3,300,000  permanent  loan. In  accordance  with the terms of the
Partnership Agreement, the Partnership paid an acquisition fee of $400,000 to GP
L'Auberge Communities, L.P. for its services in structuring and negotiating this
acquisition.  The Partnership also incurred acquisition expenses relating to the
acquisition which totaled $97,475.

On July 3, 1996, the Partnership and certain affiliates consummated an agreement
with  Highland  Properties,  Inc.  ("Highland"),  a Colorado  based  residential
development,  construction  and  management  firm and  developer of the property
known as L'Auberge Pinecliff,  which separated the interests of Highland and the
Partnership, thus affording the Partnership greater flexibility in the operation
and  disposition  of  the  property.  In  consideration  of  a  payment  by  the
Partnership  to  Highland  totaling  $7,718,  and  delivery  of  certain  mutual
releases,  Highland (i)  relinquished its option to exercise its rights of first
refusal  with regard to the sale of the  property  and (ii)  assigned all of its
interest in the L'Auberge  Pinecliff  Joint Venture to the  Partnership,  (while
preserving  the economic  interests  of the  venturer in these Joint  Ventures),
which  resulted in the  dissolution  of the L'Auberge  Pinecliff  Joint Venture.
Highland may still share in the cash flow distributions or proceeds from sale of
the properties if certain performance levels are met.

The Partnership  expects to sell the properties at some future time, taking into
consideration  such factors as the price to be realized,  the possible  risks of
continued  ownership  and  the  anticipated  advantages  to be  gained  for  the
partners.  Proceeds from the sale,  financing or  refinancing  of the properties
will not be reinvested by the  Partnership  or its joint  ventures,  but will be
distributed  to the  partners,  so that the  Partnership  will,  in  effect,  be
self-liquidating.  Under the terms of the various  termination  agreements,  the
Partnership has control over the decision to sell any property.

The success of the  Partnership  will depend upon factors which are difficult to
predict  and many of which are  beyond  the  control  of the  Partnership.  Such
factors  include,   among  others,  general  economic  and  real  estate  market
conditions,  both on a national basis and in those areas where the Partnership's
investments  are located,  competitive  factors,  the  availability  and cost of
borrowed  funds,  real  estate tax  rates,  federal  and state  income tax laws,
operating  expenses  (including   maintenance  and  insurance),   energy  costs,
government   regulations,   and  potential   liability   under  and  changes  in
environmental  and  other  laws,  as well as the  successful  management  of the
properties.

On-site management of all of the Partnership's properties,  Villas at Sin Vacas,
Villa  Antigua,  and  Pinecliff,  is currently  conducted by an affiliate of the
General  Partners.  The terms of such property  management  services between the
Partnership and property managers are embodied in a written management agreement
with  respect to each  property.  The  property  manager  in each case  receives
management  fees which are  competitive  with those  obtainable in  arm's-length
negotiations  with  independent  parties  providing  comparable  services in the
localities in which the properties  are located.  These fees do not exceed 4% of
the gross revenues from each property plus reimbursement for allocable expenses.

It is the  responsibility  of the General Partners to select or approve property
managers and to supervise their  performance.  Property managers are responsible
for on-site  operations  and  maintenance,  generation  and collection of rental
income and payment of operating expenses.

The  difference  between  rental  income and  expenses  related  to  operations,
including  items  such as local  taxes  and  assessments,  utilities,  insurance
premiums,  maintenance,   repairs  and  improvements  (and  reserves  therefor),
bookkeeping and payroll expenses, legal and accounting fees, property management
fees and other  expenses  incurred,  constitute the  properties'  operating cash
flow.   The   Partnership's   administrative   expenses  are  paid  out  of  the
Partnership's  share of such  cash  flow from the  various  properties  and from
interest income which the Partnership earns on its short-term investments.

The  Partnership's  investments  in real  estate  are also  subject  to  certain
additional  risks  including,  but not limited to, (i) competition from existing
and  future  projects  held by other  owners in the  areas of the  Partnership's
properties,  (ii)  possible  reduction  in rental  income due to an inability to
maintain  high  occupancy  levels,  (iii) adverse  changes in mortgage  interest
rates, (iv) possible adverse changes in general economic  conditions and adverse
local conditions, such as competitive overbuilding,  or a decrease in employment
or adverse  changes in real estate zoning laws, (v) the possible future adoption
of rent control  legislation which would not permit the full amount of increased
costs to be passed on to tenants in the form of rent  increases,  and (vi) other
circumstances over which the Partnership may have little or no control.

The  Partnership's  investments are subject to competition in the rental,  lease
and  sale of  similar  types  of  properties  in the  localities  in  which  the
Partnership's real property  investments are located.  Furthermore,  the General
Partners  of the  Partnership  are  affiliated  with other  partnerships  owning
similar  properties in the vicinity in which the  Partnership's  properties  are
located. In addition,  other limited partnerships may be formed by affiliates of
the General Partners which will compete with the Partnership.

The  Partnership  considers  itself to be engaged in only one industry  segment,
real estate investment.

ITEM 2.   PROPERTIES

The Partnership owns and operates three  properties:  (1) Villas at Sin Vacas, a
72-unit  multifamily  rental  property  in  Tucson,  Arizona,  subject  to first
mortgage financing in the original principal amount of $2,575,000; (2) L'Auberge
Pinecliff, a 96-unit multifamily rental property in Colorado Springs,  Colorado,
subject  to  first  mortgage  financing  in the  original  principal  amount  of
$3,300,000;  and, (3) Villa Antigua,  an 88-unit  multifamily rental property in
Scottsdale,  Arizona,  subject  to  first  mortgage  financing  in the  original
principal amount of $3,200,000.  The ownership was formerly  structured as Joint
Ventures of which the Partnership owned a majority interest.  With regard to the
termination of the Joint Ventures, see Note 5 of Notes to Consolidated Financial
Statements.

Villas at Sin Vacas

As of  February  28,  1997,  the  property  was 91%  occupied,  compared  to 86%
approximately  one year ago. At December 31, 1996 and 1995, the market rents for
the various unit types were as follows:

                                                Market Rents
                                                 December 31,
Unit
                                                1996       1995
 ---------                                      ----       ----
One bedroom one bath                             $835       $835
Two bedroom two bath                            1,050      1,050
Three bedroom two bath                          1,200      1,200

Pinecliff

As of  February  28,  1997,  the  property  was 86%  occupied,  compared  to 95%
approximately  one year ago. At December 31, 1996 and 1995, the market rents for
the various unit types were as follows:

                                                    Market Rents
                                                    December 31,
Unit Type                                           1996       1995
---------                                            ----       ----
One bedroom one bath                                 $921       $898
Two bedroom two bath                                1,125      1,102


Villa Antigua

As of  February  28,  1997,  the  property  was 94%  occupied,  compared  to 99%
approximately  one year ago. At December 31, 1996 and 1995, the market rents for
the various unit types were as follows:

                                                         Market Rents
                                                        December 31,
 Unit Type                                               1996       1995
 ---------                                               ----       ----
 One bedroom one bath                                    $843       $760
 Two bedroom two bath                                   1,080      1,028
 Three bedroom two bath                                 1,130      1,090


ITEM 3.   LEGAL PROCEEDINGS

There are no material  pending legal  proceedings to which the Partnership or of
which any of the properties is the subject.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No  matters  were  submitted  to a vote of  security  holders  during the fourth
quarter of 1996.
                                                      PART II

ITEM 5.   MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
          SHAREHOLDER MATTERS

The  transfer  of Units is  subject  to  certain  limitations  contained  in the
Partnership  Agreement.  There is no public  market  for the Units and it is not
anticipated that any such public market will develop.

The number of holders of Units as of December 31, 1996 was 1,967.

Distributions  are made to the Partners on a quarterly basis based upon Net Cash
from Operations,  as calculated  under Section 10 of the Partnership  Agreement.
Total cash  distributions to the Limited Partners for 1996 and 1995 were paid as
follows:

                     Date of
Quarter Ended        Payment                                  Amount
-------------       ------                                     ------
March 31, 1995       May 15, 1995                          $  121,579
June 30, 1995        August 15, 1995                       $  121,579
September 30, 1995   November 15, 1995                     $  121,579
December 31, 1995    February 15, 1996                     $   97,263
March 31, 1996       May 15, 1996                          $   97,263
June 30, 1996        August 15, 1996                       $   97,263
September 30, 1996   December 11, 1996                     $   97,263
December 31, 1996    February 28, 1997                     $   97,263


ITEM 6.   SELECTED FINANCIAL DATA

The  following  selected  financial  data of the  Partnership  and  consolidated
subsidiaries has been derived from consolidated  financial  statement audited by
Coopers & Lybrand,  L.L.P.,  whose  reports for the periods  ended  December 31,
1996, 1995 and 1994 are included elsewhere in the Form 10K and should be read in
conjunction with the full consolidated  financial  statements of the Partnership
including the Notes thereto.
<TABLE>
                                   Year Ended


                                                     12/31/96      12/31/95       12/31/94       12/31/93      12/31/92
<S>                                                <C>           <C>            <C>            <C>           <C>

Rental income                                      $2,615,350    $2,725,119     $2,572,947     $2,391,911    $2,204,133
Net income (loss)                                  ($167,778)      $309,115       $260,976       $141,982    ($142,622)

Net income (loss) allocated to Partners:
   Limited Partners - Per Unit
      Aggregate 32,421 Units                          ($5.12)         $9.06          $7.65          $4.16       ($4.36)
   General Partners                                  ($1,678)       $15,456        $13,049         $7,099      ($1,426)

Cash distributions to Partners:
   Limited Partners:
      Weighted average per Unit                        $12.00        $15.50         $17.75          $9.50         $3.00
   General Partners                                   $20,476       $26,449        $30,288        $16,211        $5,119

Total assets                                      $15,644,667   $16,274,801    $16,587,271    $17,032,336   $17,327,814
Long term obligations                              $8,559,930    $8,695,278     $8,818,891     $8,931,713    $9,034,755
</TABLE>

Long term obligations become due in 1997.  The Partnership intends to refinance
these notes prior to the due date, although there can be no assurance that the
Partnership will be able to do so.  See Note 6 of Notes to Consolidated
 Financial Statements.





ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS

This Management's  Discussion and Analysis of Financial Condition and Results of
Operations  contains  forward-looking   statements  including  those  concerning
Management's  expectations  regarding  future  financial  performance and future
events.   These   forward-looking   statements  involve   significant  risk  and
uncertainties,  including  those  described  herein.  Actual  results may differ
materially from those anticipated by such forward-looking statements.

Liquidity; Capital Resources

In connection with its  capitalization,  the Partnership  admitted investors who
purchased  a total of  32,421  Units  aggregating  $16,210,500.  These  offering
proceeds,  net of  organizational  and offering  costs of  $2,431,575,  provided
$13,778,925  of net  proceeds to be used for the  purchase  of  income-producing
residential properties, including related fees and expenses, and working capital
reserves.  The Partnership expended $10,410,263 to (i) acquire its joint venture
interests in the Sin Vacas Joint Venture,  the Villa Antigua Joint Venture,  and
the Autumn Ridge Joint  Venture,  (ii) to pay  acquisition  expenses,  including
acquisition fees to one of the General Partners,  and (iii) to pay certain costs
associated with the refinancing of the Pinecliff permanent loan. The Partnership
distributed  $1,731,681 to the Limited Partners as a return of capital resulting
from  construction  cost savings with  respect to the Sin Vacas,  Pinecliff  and
Villa Antigua  projects and other excess  offering  proceeds.  The remaining net
proceeds of $1,636,981 were used to establish  initial working capital reserves.
These reserves have been used periodically to enable the Partnership to meet its
various  financial  obligations  including  contributions  to the various  Joint
Ventures that may be required.  Cumulatively through December 31, 1996, $368,990
was contributed to the Joint Ventures for this purpose.

In addition to the proceeds generated from the public offering,  the Partnership
utilized  external  sources of financing at the joint  venture level to purchase
properties. The Partnership Agreement limits the aggregate mortgage indebtedness
which  may be  incurred  in  connection  with  the  acquisition  of  Partnership
properties to 80% of the purchase price of such properties.

The Partnership's  future ability to generate cash adequate to meet its needs is
dependent primarily on the successful operations of its real estate investments.
Such ability is also dependent upon the future  availability of bank borrowings,
and  upon  the  future  refinancing  or sale of the  Partnership's  real  estate
investments and the collection of any mortgage  receivable which may result from
such sales.  These  sources of  liquidity  will be used by the  Partnership  for
payment  of  expenses  related  to real  estate  operations,  debt  service  and
professional and management fees and expenses.  Net Cash From Operations and Net
Proceeds,  if  any,  as  defined  in the  Partnership  Agreement,  will  then be
available for  distribution to the Partners in accordance with Section 10 of the
Partnership  Agreement.  The General  Partners  believe that the current working
capital  reserves  together with  projected  cash flows for 1997 are adequate to
meet the  Partnership's  operating cash needs in the coming year. With regard to
certain  balloon  payments on existing first mortgage debt on the  Partnership's
properties,  the General  partners do not anticipate  sufficient  cash flow from
operations to retire these mortgage  notes.  As these mortgage notes payable are
due in fiscal 1997,  the  Partnership  will seek to  renegotiate  these mortgage
notes with its  existing  lenders or seek new  sources  of  financing  for these
properties  on a long term basis,  although  there can be no assurance  that the
Partnership  will be able to do so. The General  Partners  believe that existing
cash  flows  from  the  properties  will be  sufficient  to  support  a level of
borrowing that is at least equal to amounts outstanding as of December 31, 1996.
If the general economic  climate for real estate in these  respective  locations
were to  deteriorate  resulting  in an increase in interest  rates for  mortgage
financing or a reduction in the  availability of real estate mortgage  financing
or a decline in the market values of real estate it may affect the Partnership's
ability to complete these refinancings.

The  working  capital  reserves  of the  Partnership  consist  of cash  and cash
equivalents  and  short-term  investments.  Together  these amounts  provide the
Partnership with the necessary  liquidity to carry on its day-to-day  operations
and to make necessary  contributions to the various Joint Ventures. In 1996, the
aggregate net decrease in working capital  reserves was $481,980.  This decrease
resulted  primarily  from cash  provided by  operations  of  $349,757  offset by
$281,346 of fixed asset  additions,  distributions  to partners of $389,052  and
$135,348 of principal payments on mortgage notes payable.

In 1995, the aggregate net decrease in working capital reserves was $41,502.
This decrease resulted primarily from cash provided by operations of $758,756
offset by $148,127 of fixed asset additions, distributions to
partners of $528,974 and $123,613 of principal payments on mortgage notes
payable.
Results of Operations

For the year ended December 31, 1996, the  Partnership's  operating results were
comprised of its share of the income and expenses from the Sin Vacas,  L'Auberge
Pinecliff  (formerly  Autumn  Ridge) and Villa  Antigua  properties,  as well as
partnership level interest income earned on short term  investments,  reduced by
administrative expenses. A summary of these operating results appears below:
<TABLE>

                                  Sin         L'Auberge        Villa       Investment   Consolidated
                                 Vacas        Pinecliff       Antigua        Total         Total

<S>                                <C>         <C>              <C>            <C>        <C>

Total revenue                     $694,550     $1,022,283       $901,463       $53,445    $2,671,741

Expenses:
  General and administrative         1,686        -                  259       381,328       383,273
  Operations                       410,622        437,646        363,192        26,368     1,237,828
  Depreciation and                 126,677        181,804        122,636       -             431,117
amortization
  Interest                         223,411        286,313        277,577       -             787,301
                              ------------- -------------- --------------
                                                                          ------------- -------------
                                   762,396        905,763        763,664       407,696     2,839,519
                              ------------- -------------- --------------
                                                                          ============= =============
Net income (loss)                ($67,846)       $116,520       $137,799    ($354,251)    ($167,778)
                              ============= ============== ============== ============= =============
</TABLE>

For the year ended December 31, 1995, the  Partnership's  operating results were
comprised  of its share of the income and  expenses  from the Sin Vacas,  Autumn
Ridge and Villa Antigua Joint  Ventures,  as well as partnership  level interest
income earned on short term investments,  reduced by administrative  expenses. A
summary of these operating results appears below:
<TABLE>


                                  Sin         L'Auberge        Villa       Investment   Consolidated
                                 Vacas        Pinecliff       Antigua        Total         Total
<S>                               <C>          <C>              <C>           <C>         <C>

Total revenue                     $755,680     $1,041,402       $930,236       $81,023    $2,808,341

Expenses:
  General and administrative         7,200          7,244          7,200       183,245       204,889
  Operations                       353,533        420,726        310,611       -           1,084,870
  Depreciation and                 118,909        173,174        118,217       -             410,300
amortization
  Interest                         226,761        290,606        281,800       -             799,167
                              ------------- -------------- --------------
                                                                          ------------- -------------
                                   706,403        891,750        717,828       183,245     2,499,226
                              ------------- -------------- --------------
                                                                          ============= =============
Net income (loss)                  $49,277       $149,652       $212,408    ($102,222)      $309,115
                              ============= ============== ============== ============= =============
</TABLE>

For the year ended December 31, 1994, the  Partnership's  operating results were
comprised  of its share of the income and  expenses  from the Sin Vacas,  Autumn
Ridge and Villa Antigua Joint  Ventures,  as well as partnership  level interest
income earned on short term investments,  reduced by administrative  expenses. A
summary of these operating results appears below:
<TABLE>

                                  Sin          Autumn         Villa       Investment   Consolidated
                                 Vacas         Ridge         Antigua         Total        Total
<S>                               <C>           <C>             <C>             <C>       <C>

Total revenue                      $757,490      $979,216       $838,362        $56,007   $2,631,075

Expenses:
  General and administrative          7,494         7,793          7,862        143,532      166,681
  Operations                        339,483       353,665        298,421        -            991,569
  Depreciation and                  115,612       169,787        116,476        -            401,875
amortization
  Interest                          229,820       294,553        285,601        -            809,974
                              -------------- ------------- -------------- ---------------------------
                                    692,409       825,798        708,360        143,532    2,370,099
                              -------------- ------------- -------------- ---------------------------
Net income                          $65,081      $153,418       $130,002      ($87,525)     $260,976
(Loss)
                              ============== ============= ============== ===========================
</TABLE>

Comparison of 1996 and 1995 Operating Results:

In accordance  with its  dispositions  strategy,  (see "Projected 1997 Operating
Results"  below).  the Partnership  incurred one time costs  associated with the
Evans Withycombe termination  ($73,775),  the Highland termination (($7,718) and
their  related  legal  costs.  (Refer  to Note 5 of the  Consolidated  Financial
Statements.) In additions,  the Partnership  incurred  one-time costs associated
with its property  interior and exterior  refurbishment  program,  the change in
on-site management following the Evans Withycombe  termination,  the outsourcing
of much of the Partnership's  administration work to an administrative agent and
the relocation of the remaining administration,  financial and investor services
functions  to a more cost  efficient  location  in Colorado  Springs,  Colorado.
Consequently,  competitive pressures and  disposition-related  activities led to
rental operating expenses (including advertising,  promotion,  apartment locator
and  concession  costs) to  increase  by $152,958 or 14% over the prior year and
total general and administrative  expenses of the Partnership increased $178,384
(87%)  over the prior  year.  Fixed  asset  purchases  increased  $281,346  from
$141,735 in the prior year and  consisted  of such items as carpet,  appliances,
equipment for fitness and business centers facilities,  and remodeling features.
As a result of the factors described above,  distributions to partners decreased
$119,446, or 23%, from $528,974 in 1995 to $409,528 in 1996.

Comparison of 1995 and 1994 Operating Results:

Total revenue  increased  $177,266,  or 7% over the prior year, due to increased
rental income of $152,172 or 6%,  primarily as a result of rental rate increases
at the  Partnership's  properties.  Interest income increased  $25,094 or 43% in
1995, as a result of higher  interest rates earned on money market  accounts and
short-term  investments.  Rental operating expenses increased $93,301 or 9% over
the prior year primarily as a result of increases in maintenance and advertising
costs.  General  and  administrative  expenses  increased  $38,208  or 23%,  due
primarily to increased  salary expense  allocations and legal costs and printing
and mailing costs associated with the voluntary  withdrawal of a general partner
of the Partnership.  Fixed asset purchases increased $141,735 from $6,392 in the
prior year to $148,127 and included  such items as carpet,  floor tile and other
replacements  and  exterior  painting  of Sin Vacas.  As a result of the factors
described  above,  distributions  to partners  decreased  $76,788,  or 13%, from
$605,762 in 1994 to $528,974 in 1995

Projected 1997 Operating Results:

While there can be no assurance that the Partnership  will dispose of any or all
of its  properties  in 1997,  on March 25, 1997,  the  Partnership  entered into
letters  of  intent  to sell  Villas  Sin Vacas in  Tucson,  Arizona,  and Villa
Antigua,  Phase I, in Scottsdale,  Arizona,  to an unaffiliated  purchaser.  The
purchase  price for Villas Sin Vacas would be $5,040,000  and the purchase price
for  Villa  Antigua,  Phase I,  would be  $9,230,000.  Each  letter of intent is
subject to  completion of customary  due  diligence to the  satisfaction  of the
purchaser,  the purchaser  obtaining a financing  commitment for the purchase of
the property on commercially  reasonable  terms and conditions,  the negotiation
and execution of a definitive purchase agreement,  and certain other conditions.
Accordingly,  there can be no assurance that the sale of such properties will be
consummated in accordance  with the terms of the letters of intent or at all. As
a  result  of the  foregoing,  operating  results  of the  Partnership  may vary
significantly during 1997.

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     See Appendix A to this Report.

ITEM 9.   DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

     None


<PAGE>


                                                     PART III


ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The  Partnership has no directors or executive  officers.  Information as to the
individual  general  partners of the  Partnership  and  directors  and executive
officers of L'Auberge  Communities,  Inc.  (formerly Berry and Boyle Inc.),  the
general partner of GP L'Auberge Communities, L.P., is set forth below.

Individual General Partners

Stephen B.  Boyle,  age 56, is  President,  Executive  Officer  and  Director of
L'Auberge Communities, Inc. and a general partner and co-founder of LP L'Auberge
Communities,  a California  Limited  Partnership  (formerly Berry and Boyle),  a
limited  partnership  formed  in 1983 to  provide  funds to  various  affiliated
general  partners  of real  estate  limited  partnerships,  one of  which  is GP
L'Auberge Communities, L.P.

In September  1995, with the consent of Limited  Partners  holding a majority of
the outstanding  Units,  as well as the consent of the mortgage  lenders for the
Partnership's  three properties,  Richard G. Berry resigned as a general partner
of the Partnership.

GP L'Auberge Communities, L.P.

Information as to the directors and executive officers of L'Auberge Communities,
Inc., a general partner of GP L'Auberge  Communities,  L.P.,  which is a general
partner of the Partnership, and its affiliates, is set forth below. There are no
familial  relationships  between or among any officer  and any other  officer or
director.

Name                                                         Position

Stephen B. Boyle                    See above

Earl C. Robertson                   Executive Vice President and Chief
                                      Financial Officer

Donna Popke                         Vice President and Secretary

Earl C. Robertson,  age 48, has been a senior development  officer,  partner and
consultant  in several  prominent  real estate  development  companies  for over
twenty years,  including Potomac  Investment  Associates,  developers of planned
golf course communities  nationwide.  Mr. Robertson was also a key member of the
management  team that  developed the  nationally  acclaimed Inn at the Market in
Seattle. He joined L'Auberge Communities, Inc. in June 1995.

Donna Popke, age 37, joined L'Auberge Communities,  Inc. in July, 1995 and holds
the  title  of  Vice  President  and  Secretary.   Prior  to  joining  L'Auberge
Communities,  Inc.,  Ms.  Popke was  employed by Olive &  Associates  in Denver,
Colorado in the field of public  accounting for six years and later from 1989 to
1995 with  David R.  Sellon &  Company,  a  Colorado  Springs  land  development
company.

ITEM 11.   EXECUTIVE COMPENSATION

None of the General Partners or any of their officers or directors  received any
compensation  from  the  Partnership.  See  Item  13  below  with  respect  to a
description of certain transactions of the General Partners and their affiliates
with the Partnership.

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
           MANAGEMENT

As March  21,  1997,  no person  of  record  owned or was  known by the  General
Partners  to own  beneficially  more  than 5% of the  Partnership's  outstanding
Units.


ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During  the year  ended  December  31,  1996,  the  Partnership  paid or accrued
remuneration to the General  Partners or their affiliates as set forth below. In
addition to the information provided herein,  certain transactions are described
in notes 7 and 8 in the Notes to Financial  Statements  appearing in Appendix A,
which are  included  in this  report and are  incorporated  herein by  reference
thereto.

Net Cash From Operations distributed in 1996
  to the General Partners                                 $20,476

Allocation of Income and (Loss)
 to the General Partners
                                                         ($1,678)
Property management fees paid to an affiliate of
the General Partners                                      $64,954

Reimbursements to General Partners                        $82,881



<PAGE>


                                                      PART IV

ITEM 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
           FORM 8-K

(a)      1,2          See Page F-2
         3            See Exhibit Index contained herein

(b)      Reports on Form 8-K

         The  Partnership has not filed and was not required to file any reports
         on Form 8-K during the last quarter of 1996.

(c)      See Exhibit Index contained herein

(d)      See Page F-2.



<PAGE>


                                                    SIGNATURES


Pursuant to the requirements of Section 13 or 15 (d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.





CLUSTER HOUSING PROPERTIES

By: GP L'Auberge Communities, L.P., a California
Limited Partnership, General Partner

By: L'Auberge Communities, Inc., its General Partner


By: __/s/ Earl C. Robertson_________________________________
Earl C. Robertson, Executive Vice President
and Chief Financial Officer

Date: March 26, 1997




Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates indicated.

       Signature                                 Title               Date



__/s/ Stephen B. Boyle       Director, President and      March 26, 1997
  --------------------
  STEPHEN B. BOYLE           Principal Executive
                             Officer of L'Auberge
                              Communities, Inc.



__/s/ Earl C. Roberston     Executive Vice President and      March 26, 1997
  ---------------------
  EARL C. ROBERTSON                         Principal Financial Officer of
                           L'Auberge Communities, Inc.



<PAGE>








                                 APPENDIX A
                          CLUSTER HOUSING PROPERTIES
                    (A California Limited Partnership)
                              AND SUBSIDIARIES
                                 ---------








                      CONSOLIDATED FINANCIAL STATEMENTS

               ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
                       For the Year Ended December 31, 1996




<PAGE>





                               CLUSTER HOUSING PROPERTIES
                          (A California Limited Partnership)
                                   AND SUBSIDIARIES
                                    ---------
            INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


Report of Independent Accountants                                       F-3


Consolidated Balance Sheets at December 31, 1996 and 1995               F-4


Consolidated Statements of Operations for the years
ended December 31, 1996, 1995 and 1994                                  F-5


Consolidated Statements of Partners' Equity (Deficit)
for the years ended December 31, 1996, 1995 and 1994                   F-6

Consolidated Statements of Cash Flows for the years
ended December 31, 1996, 1995 and 1994                              F-7 -- F-8


Notes to Consolidated Financial Statements                        F-9 -- F-16


All  Schedules  are omitted as they are not  applicable,  not  required,  or the
information is provided in the financial statements or the notes thereto.



<PAGE>











                                         Report of Independent Accountants


To the Partners of
Cluster Housing Properties
(a California Limited Partnership):

         We have audited the accompanying consolidated balance sheets of Cluster
Housing  Properties (a California  Limited  Partnership)  and subsidiaries as of
December  31,  1996  and  1995,  and  the  related  consolidated  statements  of
operations,  partners'  equity  (deficit)  and cash  flows for each of the three
years in the period ended December 31, 1996. These financial  statements are the
responsibility of the General Partners of the Partnership. Our responsibility is
to express an opinion on these financial statements based on our audits.

         We conducted our audits in accordance with generally  accepted auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the accounting  principles used and significant  estimates made by the
General Partners of the Partnership, as well as evaluating the overall financial
statement  presentation.  We believe that our audits provide a reasonable  basis
for our opinion.

         In our opinion,  the  financial  statements  referred to above  present
fairly, in all material respects, the consolidated financial position of Cluster
Housing  Properties (a California  Limited  Partnership)  and subsidiaries as of
December 31, 1996 and 1995 and the consolidated  results of their operations and
their cash flows for each of the three years in the period  ended  December  31,
1996 in conformity with generally accepted accounting principles.





Denver , Colorado
February 28, 1997



<PAGE>



                         CLUSTER HOUSING PROPERTIES
                     (A California Limited Partnership)
                                AND SUBSIDIARIES

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  ----------


                                                                F-18


<TABLE>

                                             CLUSTER HOUSING PROPERTIES
                                         (a California Limited Partnership)
                                                  AND SUBSIDIARIES

                                             CONSOLIDATED BALANCE SHEETS

                                                 December 31, 1996 and 1995
                                               ---------------

                                                   ASSETS


                                             1996           1995

                                             ----           ----
Property, at cost:
<S>                                       <C>            <C>
  Land                                    $3,677,028     $3,677,028
  Buildings and improvements              14,067,757     14,067,756
  Equipment, furnishings and               1,576,836      1,295,545
fixtures
                                        --------------- --------------

                                             19,321,621     19,040,329
Less accumulated depreciation               (4,810,314)    (4,418,093)
                                        --------------- --------------

                                            14,511,307     14,622,236

Cash and cash equivalents                   1,065,855        480,389
Short-term investments                                     1,067,446
                                               -
Real estate tax escrows                        41,632         44,055
Deposits                                        3,818          1,693
Accounts receivable                             2,605            631
Deferred expenses, net ofaccumulated
  amortization of $175,041 and                 19,450         58,351
$136,140                                 --------------- --------------

         Total assets                      $15,644,667    $16,274,801
                                       =============== ==============

                 LIABILITIES AND PARTNERS' EQUITY

Mortgage notes payable                      $8,559,930     $8,695,278
Accounts payable                               115,410         42,245
Accrued expenses                               195,794        164,298
Due to affiliates                                8,975         23,173
(Note 8)
Rents received in advance                        4,538         10,495
Tenant security                                 55,320         57,306
deposits
                                         --------------- --------------
                                              8,939,967      8,992,795
liabilities


Minority interest                                              (8,895)
                                                 -
Partners' equity                              6,704,700      7,290,901
                                        --------------- --------------

 Total liabilities and partners' equity      $15,644,667    $16,274,801
                                          ============= ==============

</TABLE>



<PAGE>

<TABLE>



                                     CLUSTER HOUSING PROPERTIES
                                 (a California Limited Partnership)
                                           AND SUBSIDIARIES

                              CONSOLIDATED STATEMENTS OF OPERATIONS

                        for the years ended December 31, 1996, 1995 and 1994
                             -------------



                                                     1996          1995             1994
                                                     ----          ----             ----
Revenue:
<S>                                                <C>            <C>              <C>
   Rental income                                   $2,615,350     $2,725,119       $2,572,947
   Interest Income                                     56,391         83,222           58,128
                                                 ----------------------------------------------

Total Revenue                                       2,671,741      2,808,341        2,631,075

Expenses:
   Operations                                       1,237,828      1,084,870          991,569
   Interest expense                                   787,301        799,167          809,974
   Depreciation and amortization                      431,117        410,300          401,875
   General and administrative                         383,273        204,889          166,681
                                                 ----------------------------------------------

Total Expenses                                      2,839,519      2,499,226        2,370,099
                                                 ----------------------------------------------

Net income (loss)                                  ($167,778)       $309,115         $260,976
                                                 ==============================================

Net income (loss) allocated to:
  General Partners                                   ($1,678)        $15,456          $13,049

  Per unit Net income (loss) allocated to
    Investor Limited Partner
interest:
       32,421 units                                   ($5.12)          $9.06            $7.65
issued

</TABLE>


<PAGE>







                                     CLUSTER HOUSING PROPERTIES
                                 (a California Limited Partnership)
                                          AND SUBSIDIARIES

                       CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
                          for the years ended December 31, 1996, 1995 and 1994
                                                -------------
<TABLE>

                                                                                  Investor         Total
                                                                  General         Limited        Partners'
                                                                 Partners         Partners        Equity

<S>                                                               <C>              <C>            <C>
Balance at December 31, 1993                                      ($141,908)       $7,997,454     $7,855,546

Cash distributions                                                  (30,288)        (575,474)      (605,762)

Net income                                                            13,049          247,927        260,976
                                                               --------------  --------------- --------------

Balance at December 31, 1994                                       (159,147)        7,669,907      7,510,760

Cash distributions                                                  (26,449)        (502,525)      (528,974)

Net income                                                            15,456          293,659        309,115
                                                               --------------  --------------- --------------

Balance at December 31, 1995                                       (170,140)        7,461,041      7,290,901

Minority interest absorbed                                               -            (8,895)        (8,895)

Cash distributions                                                  (20,476)        (389,052)      (409,528)

Net income                                                           (1,678)        (166,100)      (167,778)
                                                               --------------  --------------- --------------

Balance at December 31, 1996                                      ($192,294)       $6,896,994     $6,704,700
                                                               ==============  =============== ==============

</TABLE>


<PAGE>




                            CLUSTER HOUSING PROPERTIES
                      (a California Limited Partnership)
                                AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF CASH FLOWS

                     for the years ended December 31, 1996, 1995, 1994

<TABLE>
                                                                   1996             1995           1994
                                                                   ----             ----           ----
Cash flows from operating activities:
<S>                                                                  <C>              <C>            <C>
  Interest received                                                  $80,257          $82,408        $55,610
  Cash received from rental income                                 2,607,383        2,716,163      2,569,838
  General and administrative                                       (370,245)        (201,143)      (159,895)
expenses
  Operations expense                                             (1,179,822)      (1,039,036)      (968,373)
  Interest paid                                                    (787,816)        (799,636)      (810,404)
                                                                                               --------------
                                                               --------------  ---------------

Net cash provided by operating activities                            349,757          758,756        686,776

Cash flows from investing activities:
  Purchase of fixed assets                                         (281,346)        (148,127)        (6,392)
  Cash received from short-term investments                        1,043,580          327,298         32,545
                                                               --------------  --------------- --------------
Net cash provided by investing activities                            762,234          179,171         26,153

Cash flows from financing activities:
  Distributions to partners                                        (389,052)        (528,974)      (605,762)
  Deposits                                                           (2,125)            (358)           (95)
  Principal payments on mortgage notes payable                     (135,348)        (123,613)      (112,822)
                                                               --------------  --------------- --------------

Net cash used by financing                                         (526,525)        (652,945)      (718,679)
activities
                                                               --------------  --------------- --------------

Net increase (decrease) in cash and cash                             585,466          284,982        (5,750)
equivalents

Cash and cash equivalents at beginning of  the period                480,389          195,407        201,157
                                                               --------------  --------------- --------------

Cash and cash equivalents at end of the period                    $1,065,855         $480,389       $195,407
                                                               ==============  =============== ==============



Non cash financing activities:
   Accrual of distributions to                                       $20,476
partners
</TABLE>



<PAGE>




                                         CLUSTER HOUSING PROPERTIES
                                     (a California Limited Partnership)
                                              AND SUBSIDIARIES

                                    CONSOLIDATED STATEMENTS OF CASH FLOWS

            for the years ended December 31, 1996, 1995, 1994


                                                -------------

Reconciliation   of  net  income  (loss)  to  net  cash  provided  by  operating
activities:

<TABLE>


                                                                   1996             1995           1994
                                                                   ----             ----           ----
<S>                                                               <C>                <C>            <C>
Net income (loss)                                                 ($167,778)         $309,115       $260,976
Adjustments to reconcile net income (loss) to net cash
  provided by operating
activities:
  Depreciation and amortization                                      431,117          410,300        401,875
Change in assets and liabilities net of effects
of investing and financing
activities:
    Decrease in real estate tax                                        2,423            7,750         14,568
escrows
   (Increase) decrease in accounts and interest receivable            21,951          (1,445)        (1,153)
    (Increase) decrease in deposits and prepaid expenses                   -            2,033        (2,033)
    Increase in accounts payable and accrued expenses                 84,185           35,871          8,679
    Increase (decrease) in due to affiliates                        (14,198)            4,088          6,973
    Increase (decrease) in rent received in                          (5,957)          (3,526)          4,446
advance
    Decrease in tenant security                                      (1,986)          (5,430)        (7,555)
deposits
                                                               --------------  --------------- --------------

Net cash provided by operating activities                           $349,757         $758,756       $686,776
                                                               ==============  =============== ==============

</TABLE>


<PAGE>



1.  Organization of Partnership:

Cluster   Housing   Properties   (a   California   Limited   Partnership)   (the
"Partnership"),  formerly Berry and Boyle Cluster Housing Properties, was formed
on August  8,  1983.  The  Partnership  issued  all of the  General  Partnership
Interests  to three  General  Partners  in exchange  for  capital  contributions
aggregating  $2,000.  Stephen B. Boyle and GP L'Auberge  Communities,  L.P.,  (a
California Limited  Partnership),  formerly Berry and Boyle Management,  are the
General  Partners.  In  September,  1995,  with the consent of Limited  Partners
holding a  majority  of the  outstanding  Units,  as well as the  consent of the
mortgage  lenders  for the  Partnership's  three  properties,  Richard  G. Berry
resigned as a general partner of the Partnership.

A  total  of  2,000  individual   Limited  Partners  owning  32,421  units  have
contributed $16,210,500 of capital to the Partnership. At December 31, 1996, the
total  number of  Limited  Partners  was 1,967.  Except  under  certain  limited
circumstances, as defined in the Partnership Agreement, the General Partners are
not required to make any additional capital contributions.  The General Partners
or their affiliates will receive various fees for services and reimbursement for
various organizational and selling costs incurred on behalf of the Partnership.

The Partnership will continue until December 31, 2010, unless terminated earlier
by the sale of all, or substantially  all, of the assets of the Partnership,  or
otherwise in accordance  with the  provisions  of Section 16 of the  Partnership
Agreement.

2.  Significant Accounting Policies:

         A.  Basis of Presentation

         The  consolidated  financial  statements  include  the  accounts of the
         Partnership and its subsidiaries:  Sin Vacas Joint Venture (Sin Vacas),
         Autumn  Ridge Joint  Venture  (Autumn  Ridge) and Villa  Antigua  Joint
         Venture (Villa  Antigua).  All  intercompany  accounts and transactions
         have been  eliminated in  consolidation.  The  Partnership  follows the
         accrual basis of accounting.  Refer to Note 5 regarding the termination
         of the Joint Ventures.

         B.  Cash and Cash Equivalents

         The Partnership  considers all highly liquid debt instruments purchased
         with a maturity  of three  months or less to be cash  equivalents.  The
         carrying value of cash and cash equivalents approximates fair value. It
         is  the  Partnership's   policy  to  invest  cash  in  income-producing
         temporary cash  investments.  The  Partnership  mitigates any potential
         risk from such concentration of credit by placing investments with high
         quality financial institutions.

         C.  Short-term Investments

         At  December  31,  1995,  short term  investments  consisted  solely of
         various forms of U. S. Government backed securities,  with an aggregate
         par  value of  $1,075,000,  which  matured  in  February,  1996.  As of
         December 31, 1996,  there were no short term  investments.  Investments
         are recorded at amortized cost, which approximates market value.

         D. Significant Risks and Uncertainties

         The  preparation of financial  statements in conformity  with generally
         accepted  accounting  principles  requires management to make estimates
         and  assumptions  that  affect  the  reported  amounts  of  assets  and
         liabilities and disclosure of contingent  assets and liabilities at the
         date of the financial  statements and the reported  amounts of revenues
         and expenses during the reporting  period.  Actual results could differ
         from those estimates.

         E.  Depreciation

         Depreciation  is provided  for by the use of the  straight-line  method
         over estimated useful lives as follows:

                  Buildings and improvements                    39-40 years
                  Equipment, furnishings and fixtures            5-15 years

         F.  Deferred Expenses

         Costs of obtaining mortgages on the properties are being amortized over
         the mortgage term using the straight-line  method,  which  approximates
         the  effective  interest  method.  Fees paid to certain of the property
         developers were amortized over the term of the services  provided using
         the straight-line  method.  Any unamortized costs remaining at the date
         of a refinancing are expensed in the year of refinancing.

         G.  Income Taxes

         The Partnership is not liable for Federal or state income taxes because
         Partnership  income or loss is allocated to the Partners for income tax
         purposes. If the Partnership's tax returns are examined by the Internal
         Revenue  Service  or state  taxing  authority  and such an  examination
         results in a change in Partnership  taxable income (loss),  such change
         will be reported to the Partners.

         H. Rental Income

         Leases require the payment of rent in advance,  however,  rental income
is recorded as earned.

         I. Long-Lived Assets

         The Partnership's  long-lived assets include property and equipment. On
         a quarterly basis, the partnership  evaluates the recoverability of the
         rental properties using undiscounted cash flows from operations.

         J. Reclassification

         Certain items in the financial  statements for the years ended December
         31,  1995  and 1994  have  been  reclassified  to  conform  to the 1996
         presentation.


<PAGE>



3. Property, at Cost

Property, at cost, consisted of the following at December 31, 1996:
<TABLE>

                                   Initial Cost                                  Costs Capitalized     Gross Amount At Which Carried
                                        to                                         Subsequent to                at Close of Period
                                   Partnership                                      Acquisition
                      ----------------------------------------- ------------------------------------  ------------------------------

                             Buildings     Equipment                Buildings   Equipment           Buildings     Equipment
      Property                  and       Furniture                   and      Furniture               and        Furniture
     Description     Land   Improvements  & Fixtures     Land     Improvements & Fixtures  Land   Improvements   & Fixtures   Total
------------------------------------------------------------ ------------------------------------ ----------------------------------
Villas at Sin Vacas,
  a 72-unit
residential
  rental complex
located
<S>                    <C>      <C>         <C>      <C>        <C>       <C>        <C>         <C>            <C>     <C>
  in Tucson, Arizona   $799,913 $3,948,060  $344,615 $22,146    $75,678   $190,059   $822,059    $4,023,738   $534,674  $5,380,471

Pinecliff, a 96-unit
 residential rental
 located in
  Colorado Springs,
  Colorado            1,242,061  5,981,166  380,288  -          81,889    169,811   1,242,061   6,063,055      550,099   7,855,215

Villa Antigua, an
88-unit
  residential rental
  complex located in
  Scottsdale, Arizona 1,610,646  3,942,388  376,709   2,262     38,576    115,354  1,612,908     3,980,964      492,063  6,085,935
                      --------------------------------------  ------------------------------    ------------------------------------

                     $3,652,620  $13,871,614   $1,101,612  $24,408  $196,143 $475,224  $3,677,028 $14,067,757 $1,576,836 $19,321,621
                     ===================================== ========================================================================

Depreciation expense for the years ended December 31, 1996, 1995 and 1994 and accumulated
depreciation
    at December 31, 1996 and 1995 consisted of the following:
                                                                                            Accumulated Depreciation
                                                  Depreciation                                    December 31,
                                                     Expense
                                          1996          1995            1994                  1996           1995
                                   -----------  ------- ----      ----------                  ----           ----
Buildings and improvements             $351,694       $351,694       $351,695              $3,639,807      $3,288,113
Equipment, furnishings and               40,527         19,709         11,283               1,170,507       1,129,980
fixtures
                                   -------------------------------------------             ---------------------------

                                       $392,221       $371,403       $362,978              $4,810,314      $4,418,093
                                   ===========================================             ===========================
</TABLE>

Each of the properties is encumbered by a nonrecourse mortgage note payable (see
Note 6).


<PAGE>


4.  Cash and Cash Equivalents:

Cash and cash  equivalents  at  December  31,  1996  and 1995  consisted  of the
following:


                                                     1996          1995
                                                     ----          ----
Cash on hand                                       $ 854,769       $ 30,848
Certificate of depo                                  211,086        100,000
Money market accoun                                 ________        349,541

                                                   $1,065,855       $480,389

5.  Joint Venture and Property Acquisitions:

The  Partnership  has invested in three  properties  located in  Scottsdale  and
Tucson,  Arizona and Colorado Springs,  Colorado. The success of the Partnership
will  depend upon  factors  which are  difficult  to predict  including  general
economic and real estate market conditions,  both on a national basis and in the
areas where the Partnership's investments are located.

Sin Vacas

On October 25, 1985,  the  Partnership  acquired a majority  interest in the Sin
Vacas Joint Venture,  which owns and operates the Villas at Sin Vacas, a 72-unit
residential  property located in Tucson,  Arizona.  Since the Partnership owns a
majority interest in the Sin Vacas Joint Venture, the accounts and operations of
the Sin Vacas Joint Venture have been consolidated into the Partnership.

The co-venture  partner was an affiliate of Evans Withycombe,  Inc.  ("EWI"),  a
Phoenix based residential development,  construction and management firm. EWI is
also the developer of the Villa Sin Vacas property.

The Partnership made initial cash payments in the form of capital  contributions
totaling $2,458,507 and funded $398,949 of property acquisition costs which were
treated as a capital  contribution  to the joint  venture.  Since  completion of
construction,   the  Partnership  has  made  additional  contributions  totaling
$275,167.  At December 31, 1996, the total capital contributions and acquisition
costs incurred were $2,713,937 and $418,686, respectively.

For the years ended December 31, 1996, 1995 and 1994 the Sin Vacas Joint Venture
had net loss of $67,846 and net income of $49,277, and $65,081, respectively

JANUARY 1, 1996 THROUGH MAY 13, 1996

Net cash from  operations (as defined in the joint venture  agreement) was to be
distributed as available to each joint venture partner quarterly as follows:

         First,  to the  Partnership,  an  amount  equal  to  8.75%  per  annum,
         noncumulative  (computed daily on a simple noncompounded basis from the
         date of completion funding) of the Partnership's capital investment, as
         defined in the joint venture agreement;

         Second, the balance 70% to the Partnership and 30% to the co-venturer.

All losses from operations and depreciation for the Sin Vacas Joint Venture were
allocated 99% to the Partnership and 1% to the co-venturer.

All profits from operations, to the extent of cash distributions, shall first be
allocated to the  Partnership and co-venturer in the same proportion as the cash
distribution. Any remaining profits are allocated 70% to the Partnership and 30%
to the co-venturer.

In the case of certain capital  transactions and distributions as defined in the
joint venture  agreement,  the  allocation of related  profits,  losses and cash
distributions,  if any, would be different than as described  above and would be
effected by the relative balances in the individual partners' capital accounts.

Villa Antigua

On June 11,  1987,  the  Partnership  acquired a majority  interest in the Villa
Antigua  Joint  Venture,  which  owns and  operates  Villa  Antigua,  an 88-unit
residential property located in Scottsdale,  Arizona. Since the Partnership owns
a majority  interest  in the Villa  Antigua  Joint  Venture,  the  accounts  and
operations of the Villa Antigua  Joint Venture have been  consolidated  into the
Partnership.

The co-venture  partner was an affiliate of Evans Withycombe,  Inc.  ("EWI"),  a
Phoenix based residential development,  construction and management firm. EWI is
also the developer of the Villa Antigua property.

The Partnership made initial cash payments in the form of capital  contributions
totaling $2,494,677 and funded $381,729 of property acquisition costs which were
treated as a capital  contribution  to the Villa  Antigua Joint  Venture.  Since
completion of  construction,  the Partnership has made additional  contributions
totaling  $85,440.  At December 31, 1996,  the total capital  contributions  and
acquisition costs were $2,580,117 and $381,729, respectively.

The Villa  Antigua  Joint  Venture  had net income of  $137,799,  $212,408,  and
$130,002 for the years ended December 31,1996, 1995 and 1994.

JANUARY 1, 1996 THROUGH MAY 13, 1996

Net cash from  operations (as defined in the joint venture  agreement) was to be
distributed as available to each joint venture partner quarterly as follows:

         First,  to  the  Partnership,   an  amount  equal  to  10%  per  annum,
         noncumulative  (computed daily on a simple noncompounded basis from the
         date of  completion  funding)  of the  Partnership's  adjusted  capital
         investment, as defined in the joint venture agreement;

         Second, the balance 70% to the Partnership and 30% to the co-venturer.

All losses from operations and  depreciation for the Villa Antigua Joint Venture
were allocated 99% to the Partnership and 1% to the co-venturer.

All profits from operations, to the extent of cash distributions, shall first be
allocated to the  Partnership and co-venturer in the same proportion as the cash
distributions; however, if for any taxable year there are no cash distributions,
profits are allocated 99% to the Partnership and 1% to the co-venturer.

In the case of certain capital  transactions and distributions as defined in the
joint venture  agreement,  the  allocation of related  profits,  losses and cash
distributions,  if any, would be different than as described  above and would be
effected by the relative balances in the individual partners' capital accounts.


<PAGE>


Sin Vacas and Villa Antigua

MAY 14, 1996 THROUGH DECEMBER 31, 1996

On May 14, 1996, the Partnership and certain affiliates consummated an agreement
with Evans  Withycombe  Management,  Inc. and certain of its affiliates  ("EWI")
which  separated the interests of EWI and the  Partnership,  thus  affording the
Partnership  greater  flexibility  in  the  operation  and  disposition  of  the
properties.  In  consideration of a payment by the Partnership to EWI of $73,775
and delivery of certain mutual  releases,  EWI (i)  relinquished its contract to
manage  Sin Vacas and Villa  Antigua  and its option to  exercise  its rights of
first refusal with regard to the sale of those  properties and (ii) assigned all
of its  interest in the Sin Vacas  Joint  Venture  and the Villa  Antigua  Joint
Venture to the  Partnership  (while  preserving  the  economic  interests of the
venturer in these Joint Ventures),  which resulted in the dissolution of the Sin
Vacas Joint Venture and the Villa Antigua Joint Venture.  EWI may still share in
the cash flow  distributions  or proceeds from sale of the properties if certain
performance levels are met.

Pinecliff

On July 16, 1986, the Partnership  acquired Pinecliff (formerly Autumn Ridge), a
96-unit  residential   property  located  in  Colorado  Springs,   Colorado  and
simultaneously  contributed  the  property  to the Autumn  Ridge  Joint  Venture
comprised of the Partnership and an affiliate of the property  developer.  Since
the Partnership owns a majority interest in the Autumn Ridge Joint Venture,  the
accounts and operations of the Autumn Ridge Joint Venture have been consolidated
into the Partnership.

The co-venture partner was Highland Properties, Inc. ("Highland") a Colorado
based residential development, construction and management firm.  Highland
developed the property known as L'Auberge Pinecliff

The Partnership made initial cash payments in the form of capital  contributions
totaling $3,819,397 and funded $546,576 of property acquisition costs which were
treated as a capital  contribution  to the Autumn  Ridge  Joint  Venture.  Since
completion of  construction,  the Partnership has made additional  contributions
totaling  $318,811.  At December 31, 1996 the total  capital  contributions  and
acquisition costs incurred were $4,187,309 and $497,475, respectively.

For the years ended  December  31,  1996,  1995 and 1994 the Autumn  Ridge Joint
Venture had net income of $116,520, $149,652, and $153,418, respectively.

JANUARY 1, 1996 THROUGH JULY 2, 1996:

Net cash from  operations (as defined in the joint venture  agreement) was to be
distributed as available to each joint venture partner quarterly as follows:

         First,  to  the   Partnership,   an  amount  equal  to  8%  per  annum,
         noncumulative  (computed daily on a simple noncompounded basis from the
         date of completion funding) of the Partnership's capital investment, as
         defined in the joint venture agreement;

         Second, the balance 82% to the Partnership and 18% to the co-venturer.

All losses from operations and  depreciation  for the Autumn Ridge Joint Venture
were allocated 100% to the Partnership.

All profits from operations, to the extent of cash distributions, shall first be
allocated to the  Partnership and co-venturer in the same proportion as the cash
distribution. Any remaining profits are allocated 82% to the Partnership and 18%
to  the   co-venturer.   In  the  case  of  certain  capital   transactions  and
distributions  as defined in the joint  venture  agreement,  the  allocation  of
related profits, losses and cash distributions,  if any, would be different than
as  described  above and  would be  effected  by the  relative  balances  in the
individual partners' capital accounts.

JULY 3, 1996 THROUGH DECEMBER 31, 1996

On July 3, 1996, the Partnership and certain affiliates consummated an agreement
with Highland  Properties,  Inc.  ("Highland")  which separated the interests of
Highland and the Partnership, thus affording the Partnership greater flexibility
in the operation and disposition of the property.  In consideration of a payment
by the Partnership,  to Highland totaling $7,718, and delivery of certain mutual
releases,  Highland (i)  relinquished its option to exercise its rights of first
refusal  with regard to the sale of the  property  and (ii)  assigned all of its
interest in the L'Auberge  Pinecliff  Joint Venture to the  Partnership,  (while
preserving  the economic  interests  of the  venturer in these Joint  Ventures),
which  resulted in the  dissolution  of the L'Auberge  Pinecliff  Joint Venture.
Highland may still share in the cash flow distributions or proceeds from sale of
the properties if certain performance levels are met.

The Sin Vacas  Joint  Venture,  the Autumn  Ridge  Joint  Venture  and the Villa
Antigua  Joint  Venture  are  sometimes  collectively  referred to as the "Joint
Ventures".  These joint  ventures  were  effectively  terminated on December 31,
1996. The Partnership has eliminated various minority interests related to these
joint ventures,  as such, the Partnership owns 100% of the underlying  assets at
December 31, 1996.

6.  Mortgage Notes Payable:

All of the property  owned by the  Partnership  is pledged as collateral for the
nonrecourse  mortgage  notes payable  outstanding  at December 31, 1996 and 1995
which consisted of the following:

                            1996                 1995
                            ----                 ----
Villas at Sin Vacas       $2,428,851         $2,467,255
Pinecliff                  3,112,702          3,161,919
Villa Antigua              3,018,377          3,066,104
                           ---------          ---------

                          $8,559,930         $8,695,278
                           =========          =========
Sin Vacas
Under the terms of the note, monthly principal and interest payments of $21,830,
based on a fixed  interest  rate of 9.125%,  are  required  over the term of the
loan. The balance of the note will be due on July 15, 1997.

Pinecliff
Under the terms of the note,  monthly principal and interest payments of $27,976
are  required  over the term of the  loan,  based  on a fixed  interest  rate of
9.125%. The balance of the note will be due on July 15, 1997.

Villa Antigua
Under the terms of the note, monthly principal and interest payments of $27,128,
based on a fixed  interest  rate of 9.125%,  are  required  over the term of the
loan. The balance of the note will be due on July 15, 1997.

As these  mortgage notes payable are due in fiscal 1997,  the  Partnership  will
seek to renegotiate  these mortgage notes with its existing  lenders or seek new
sources of  financing  for these  properties  on a long term basis.  The General
Partners believe that existing cash flows from the properties will be sufficient
to support a level of borrowing that is at least equal to amounts outstanding as
of December 31, 1996. If the general  economic  climate for real estate in these
respective  locations were to  deteriorate  resulting in an increase in interest
rates for mortgage  financing or a reduction in the  availability of real estate
mortgage  financing  or a decline  in the  market  values of real  estate it may
affect the Partnership's ability to complete these refinancings.



Interest  included in Accrued  expenses in the  Consolidated  Balance  Sheets at
December 31, 1996 and 1995 consisted of the following:

                                             1996                      1995
                                             ----                      ----
         Villas at Sin Vacas                $9,235                 $   9,381
         Pinecliff                          11,835                    12,022
         Villa Antigua                      11,476                    11,658
                                             ------                 ---------
                                          $  32,546                 $  33,061
                                           ========                  ========

The  principal   balance  of  the  mortgage  notes  payable   appearing  on  the
consolidated  balance sheets at December 31, 1996 and 1995 approximates the fair
value of such notes.

7.  Partners' Equity:

Under the terms of the  Partnership  Agreement  profits are allocated 95% to the
Limited Partners and 5% to the General Partners; losses are allocated 99% to the
Limited Partners and 1% to the General Partners.

Cash distributions to the partners are governed by the Partnership Agreement and
are made,  to the extent  available,  95% to the Limited  Partners and 5% to the
General Partners.

The allocation of the related profits, losses, and distributions,  if any, would
be different  than  described  above in the case of certain events as defined in
the  Partnership  Agreement,  such as the sale of an  investment  property or an
interest in a joint venture partnership.

8.  Related-Party Transactions:

Due to affiliates at December 31, 1996 and 1995 consisted of reimbursable  costs
payable to L'Auberge Communities, Inc., an affiliate of the General Partners, in
the amounts of $8,975, and $14,278,  respectively. In 1995 distributions payable
to the Villa  Antigua  co-venturer  totaled  $8,895.  There was no  distribution
payable to the co-venturer in 1996.

For the years ended December 31, 1996, 1995 and 1994, general and administrative
expenses  included  $82,881,  $84,643,  and  $68,625,  respectively,  of  salary
reimbursements  paid to the  General  Partners  for certain  administrative  and
accounting personnel who perform services for the Partnership.

The officers and principal shareholders of Evans Withycombe, Inc., the developer
of the Villas at Sin Vacas and Villa Antigua  properties and an affiliate of the
co-venturers of those joint  ventures,  together hold a two and one half percent
cumulative profit or partnership voting interest in LP L'Auberge Communities,  a
California Limited Partnership, formerly Berry and Boyle, which is the principal
limited partner of GP L'Auberge Communities, L.P.

During the years  ended  December  31,  1996,  1995 and 1994,  Evans  Withycombe
received   property   management   fees  of  $32,475,   $84,187,   and  $79,692,
respectively.  These  fees were 5% of rental  revenue  in each time  period.  In
addition,  for the years  ended  December  31,  1996,  1995 and  1994,  $64,954,
$51,715,  and $49,083,  respectively,  of property  management fees were paid or
accrued to  Residential  Services  -  L'Auberge,  an  affiliate  of the  General
Partners. These fees were 4% of rental revenue in 1996, and 5% of rental revenue
in 1995 and 1994.

Villa Antigua  reimbursed  $35,885,  $34,707 and $34,878,  respectively  for its
proportionate  share  of the  1996,  1995 and 1994  real  estate  taxes to Villa
Antigua Phase II, which is an affiliate of the General Partners.